Justia Contracts Opinion Summaries

This case stemmed from a contractual arrangement known as a "cash-settled total return equity swap agreement" between the parties. The parties appealed the judgment of the district court finding defendants in violation of section 13(d) of the Williams Act, 15 U.S.C. 78m(d), and permanently enjoining them from future violations. The court considered only whether a section 13(d) violation occurred with respect to CSX shares owned outright by defendants acting as a group. Because the district court did not make findings sufficient to permit appellate review of a group violation of section 13(d) with respect to outright ownership of CSX shares, the court remanded for further consideration. An earlier order affirmed the denial of an injunction against the voting of shares acquired by defendants while they were not in compliance with section 13(d). The court explained that ruling on the ground that injunctive "sterilization" of shares was not available when shareholders had adequate time to consider the belated Williams Act disclosures before the relevant shareholder's vote. Accordingly, the court affirmed in part, vacated in part, and remanded in part.

Plaintiffs sued the former spouse of Stephen Walsh, who was a defendant in related actions brought by plaintiffs, alleging that the property derived from Walsh's illegal securities activities went into the former spouse's possession under the parties' separation agreement and divorce decree. At issue, in certified questions to the court, was whether the former spouse had a legitimate claim to those funds, which would prevent plaintiffs from obtaining disgorgement from her. The court held that an innocent spouse who received possession of tainted property in good faith and gave fair consideration for it should prevail over the claims of the original owner or owners consistent with the state's strong public policy of ensuring finality in divorce proceedings.

This case stemmed from Reliance Group Holdings, Inc.'s ("RGH") and Reliance Financial Services Corporation's ("RFS") voluntary petitions in Bankruptcy Court seeking Chapter 11 bankruptcy protection and the trust that was established as a result. The trust subsequently filed an amended complaint alleging actuarial fraud and accounting fraud against respondents. At issue was whether the trust qualified for the so-called single-entity exemption that the Securities Litigation Uniform Standards Act of 1998 ("SLUSA"), 15 U.S.C. 77p(f)(2)(C); 78bb(f)(5)(D), afforded certain entities. The court held that the trust, established under the bankruptcy reorganization plan of RGH as the debtor's successor, was "one person" within the meaning of the single-entity exemption in SLUSA. As a result, SLUSA did not preclude the Supreme Court from adjudicating the state common law fraud claims that the trust had brought against respondents for the benefit of RGH's and RFS's bondholders. Accordingly, the court reversed and reinstated the order of the Supreme Court.

In 2006, Respondent Cordillera Fund, LP, purchased shares in Appellant American Ethanol for $3 per share. In 2007, shareholders of American Ethanol sought to merge with AE Biofuels, and notified their shareholders of its intent. Respondent notified American Ethanol of its intent to dissent, and demanded payment for its shares. The merger was approved by the shareholders. When the merged company refused to pay, Respondent filed suit at the district court. Ultimately the issue for the district court to resolve involved the fair value of Respondentâs shares at the time of the merger. Appellants offered respondent $0.15 per share; Respondent maintained the fair value was $3 per share. The parties went to court because neither could agree on the value. The court entered a judgment in favor of Respondent, determining that $3 per share was the fair value. On appeal, Appellants contended that the district court abused its discretion in determining the fair value of the shares. The Supreme Court concluded that appellants did not demonstrate that the district court abused its discretion, and affirmed the courtâs ruling in favor of Respondent.